Question

LGH, a non-taxpaying entity, is planning to purchase imaging equipment, including an MRI and ultrasonograms for...

LGH, a non-taxpaying entity, is planning to purchase imaging equipment, including an MRI and ultrasonograms for its new imagining center. The equipment will generate $2,500,000 per year in revenues for the next five years. The expected operating expenses, excluding $800,000 in depreciation, will increase expenses by $950,000 per year for the next five years. The initial capital investment outlay for the imaging equipment is $4,500,000. The salvage value at year five is $500,000. The cost of capital is 9%. Compute the NPV.

The answers are presented in $000's.

a.

$1,854
b.

$4,500
c.

$6,354
d.

None of the above
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Answer #1

answer is Option a. $1854

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